Fed Shouldn't Wait Until September: Poll Finds Nearly Half Want Rate Cuts Today
Portfolio Pulse from Chris Katje
A recent poll indicates that nearly half of respondents want the Federal Reserve to cut rates immediately, while 30% prefer a rate cut in September. The July FOMC meeting is expected to maintain the current federal funds rate, but easing inflation has increased the likelihood of rate cuts in the near future. Small cap stocks, represented by the iShares Russell 2000 ETF (IWM), have outperformed the SPDR S&P 500 ETF Trust (SPY) recently, as investors anticipate potential rate cuts.
July 31, 2024 | 2:57 pm
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NEUTRAL IMPACT
The SPDR S&P 500 ETF Trust (SPY) has underperformed the iShares Russell 2000 ETF (IWM) over the last month, as investors focus on potential rate cuts and their impact on small cap stocks.
While SPY has underperformed IWM recently, it remains a key benchmark for large cap stocks. The focus on potential rate cuts has shifted investor attention to small caps, impacting SPY's relative performance.
CONFIDENCE 80
IMPORTANCE 50
RELEVANCE 60
POSITIVE IMPACT
The iShares Russell 2000 ETF (IWM) has outperformed the SPDR S&P 500 ETF Trust (SPY) over the last month, driven by investor anticipation of potential rate cuts.
Small cap stocks, represented by IWM, are often viewed favorably after rate cuts due to their higher debt levels and the potential for cheaper borrowing costs. Historic data also supports small caps outperforming large caps after past rate cuts.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80